Stocks to watch: Reliance Industries, BIAL, Wipro

ET BureauNov 6, 2009, 09.58am IST

MUMBAI: The Indian stock market is seen extending earlier day's recovery on Friday with global markets showing a positive streak.

Among stocks, public sector units are expected to hog the limelight with Prime Minister Manmohan Singh approving a plan to part-sell shares in them and help the cash-strapped government raise at least Rs 60,000 crore and reduce dependence on market borrowing.

The government proposes to offload equity in all profitable and net worth positive-government-owned commercial enterprises. There are over three-dozen central PSUs that meet this criterion. According to ET Intelligence Group estimates, such companies are expected to add over nearly Rs 3,20,000 crore to the Bombay Stock Exchange's combined market capitalisation.

Research analysts differing on earnings growth prospects of Reliance Industries (RIL), which has 13% weightage on the Sensex, may have investors on the edge. Goldman Sachs, Bank of America Merrill Lynch, Kotak Securities, HSBC and Credit Suisse are mixed on whether investors should buy, sell, or hold the stock.

The reasons are many: litigation with chairman Mukesh Ambani's brother Anil Ambani over gas off the Krishna-Godavari, falling refining margins, and questions on getting its loss-making retail business to turn profits. RIL shares on Thursday closed at Rs 1939.80, after losing 3.2% in the past one week and 9.23% in the past one month. RIL shares had touched a 52-week high of Rs 2,490 on May 19, 2009. The Sensex has risen 51% in the past year, while RIL has lagged with 32% gains.

The board of GVK Power & Infrastructure Ltd has approved the acquisition of 4,61,52,000 shares, being 12% of paid up equity share capital, of Bangalore International Airport Ltd (BIAL) at a total cost of Rs.484.59 crore from Flughafen Zuerich AG through GVK Airport Developers Pvt. Ltd, a wholly owned subsidiary of GVK Power. The acquisition will be completed upon obtaining necessary consents. The company has also entered into a Strategic Alliance Agreement with Unique Airports Worldwide AG (Zurich Airport) to collaborate for new airport projects in Indian Sub-Continent.

The stock closed nearly 2% lower Thursday at Rs 47.25 on BSE, after rising to Rs 48.80 earlier in the day.

Wipro, meanwhile, has signed an agreement to acquire the Yardley business in Asia, Middle East, Australasia and certain African markets for around $45.5 million, from UK-based Lornamead Group. Revenues on run-rate basis for FY'10 are seen at $24 million. The acquisition will add to Wipro Consumer Care and Lighting (FMCG arm of Wipro)'s buys following that of Unza in 2007. The deal is expected to complete by mid December 2009. Lornamead retains the Yardley business in Europe and the America's. Yardley is a strong heritage global brand stablisbed since 1770 in the personal care category with fragrance products, bath & shower products and skin care. It is a premium priced brand and is one of the few personal care brands which hold Royal Warrants. The brand has a very strong equity globally in markets including Asia, Middle East, Australasia and Africa.